South Korea's manufacturing sector experienced its most significant contraction since June 2023, as indicated by the latest survey data from S&P Global, published on Wednesday.
The Purchasing Managers' Index (PMI) for the nation's factories dropped to 48.3 in September, down from 51.9 in August. A PMI score below 50 signifies a contraction in the sector, and this latest figure represents the lowest reading since June 2023.
New orders fell at their sharpest rate in 15 months, driven by weak client confidence and a stagnating domestic economy. Additionally, new export orders declined for the first time in 2024.
Production volumes also decreased in September, marking the most significant drop in nearly a year. The decline was moderate but notable.
Employment levels fell for the first time in five months, with the decrease being the most severe in 18 months.
Manufacturers reported a continued monthly reduction in work backlogs, as subdued order volumes allowed them to shift capacity towards completing existing orders.
Concerns about the stagnating economy led to the weakest production outlook since December 2022.
Despite these challenges, manufacturers increased their purchasing activity for the thirteenth consecutive month. However, stocks of purchases were depleted at the fastest rate since April, and suppliers' delivery times lengthened, albeit at a moderate pace and the least pronounced in three months.
On the pricing front, input price inflation eased to its lowest level since August 2023. Meanwhile, output prices were reduced for the first time in 13 months in an effort to boost sales.